Reference no: EM133057163
Questions -
Q1. On December 31, 20X1, Par Inc and Sub Corp reported current assets of $61,903 and $10,321 respectively on their balance sheets. Immediately following the reporting, Par Inc purchased all of Sub Corp's Common Shares on January 1, 20X2, for $41,273 in cash. On the acquisition date, Sub's current assets had a fair value of $26,819. The fair value of the remaining identifiable net assets was $11,348. The Common Shares accounts of Par and Sub were $88,929 and $12,131, respectively, immediately before the acquisition. The Retained Earnings accounts of Par and Sub were $8,253 and $10,983, respectively, immediately before the acquisition. (There were no other equity accounts.) What should be the amount of goodwill arising from Par's acquisition of Sub?
a. $3,028
b. $3,106
c. $3,261
d. $2,951
e. $3,184
Q2. Par Inc purchased all of the outstanding common shares of Sub Corp for cash of $68,951 on Jan 1, Year 1. On the date of acquisition, Sub's identifiable net assets had a carrying value of $11,497. The acquisition differential was allocated to the excess of fair value over book value as follows: inventory's fair value was higher by $45,973; Equipment's fair value was lower by $29,871; Trademarks' fair value was higher by $12,640; and Bonds Payable's fair value was higher by $9,193. Equipment, Trademarks, and Bonds Payable each had an amortizable life of ten (10) years. What will be the net consolidated adjustment to reflect the annual amortization of the differences between fair values and carrying values in Year 2?
a. -$2,775
b. -$2,576
c. -$2,642
d. -$2,708
e. -$2,510
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